/NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH US WIRE SERVICES/
TSX VENTURE EXCHANGE: RA.P
TORONTO, April 19 /CNW/ - RDS Acquisition Corp. ("RDS") is pleased to
announce that it has entered into a non-binding letter of intent dated
April 18, 2007 with Rapid Refill Ink International Corp. of Minneapolis,
Minnesota ("RRI") to pursue a proposed business combination.
RRI is a U.S.-based franchisor in the fast-growing ink-jet and laser
toner cartridge refill industry. The company refills and sells low-cost,
environmentally friendly cartridges for printers, fax machines, copiers and
all-in-one machines for business and consumer customers. RRI sells franchises
to operate stores that can process and refill ink or toner cartridges in
addition to selling new compatible and OEM inkjet and laser toner cartridges.
There are currently 87 stores open in 26 states. Franchisees operate the
stores under the trademark "Rapid Refill Ink". RRI is a company incorporated
under the laws of the State of Minnesota on March 5, 2005. Stephen Hockett is
the President and Chief Operating Officer of RRI.
RDS intends to complete a business combination structured as a
'three-cornered' amalgamation involving RDS, RRI and a wholly-owned subsidiary
of RDS incorporated under the laws of the State of Minnesota, pursuant to
which RDS will acquire all of the issued and outstanding shares of RRI.
Following the proposed transaction, the business of RRI will be conducted by a
wholly-owned Minnesota subsidiary of RDS. The proposed transaction will be
structured as a reorganization under section 368 (a) of the U.S. Internal
In advance of the proposed transaction, RDS intends to consolidate its
common shares on a 10:1 basis, reducing to 1,010,000 the issued and
outstanding common shares of RDS on a post-consolidated basis. RDS also
proposes to create a class of special restricted voting shares to be issued to
the two principal shareholders of RRI, which special shares will be similar to
the RDS common shares in all respects other than the voting restrictions. The
special shares will not be listed on the TSX Venture Exchange but will be
convertible into common shares on a one for one basis subject to certain
restrictions on exercise.
In conjunction with the proposed transaction, RRI intends to issue
approximately 1,800,000 to 2,000,000 common shares at US$2.25 per share
through a private placement led by Blackmont Capital Inc.
RDS will issue approximately 4,435,000 to 4,635,000 post-consolidation
shares in completing the proposed transaction, plus 4,210,000 special shares,
all at a deemed price of $US2.25 per share, representing an approximate
valuation between $US19,451,250 and $US19,901,250 for RRI. Following
completion of the proposed transaction, RDS will have approximately 9,655,000
to 9,855,000 shares issued and outstanding for an approximate total market
capitalization between $US21,723,750 and $US22,173,750.
If completed, the proposed transaction is expected to constitute RDS's
Qualifying Transaction as defined in Policy 2.4 of the TSX Venture Exchange
Inc. ("Exchange") and is subject to a number of conditions, including
compliance with all regulatory approvals. A comprehensive press release with
further particulars relating to the Proposed Transaction will follow in
accordance with the policies of the Exchange.
Completion of the transaction is subject to a number of conditions,
including but not limited to, Exchange acceptance. There can be no assurance
that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management
information circular or filing statement to be prepared in connection with the
transaction, any information released or received with respect to the
transaction may not be accurate or complete and should not be relied upon.
Trading in securities of a capital pool company should be considered highly
The TSX Venture Exchange Inc. has in no way passed upon the merits of the
proposed transaction and has neither approved nor disproved the contents
of this press release.
For further information:
For further information: Ronald D. Schmeichel, President and CEO of RDS
Acquisition Corp. at (416) 972-6294